Why IT Spending Is Stuck In A Vicious Circle

Technology professionals want to deliver business value, but it's hard to break out of the vicious circle of underfunding and catch-up. That's the main takeaway from InformationWeek's 2013 IT Spending Priorities Survey of more than 500 IT pros who set, manage or have a working knowledge of the tech budgets at their companies.

Although only 20 respondents who added comments to their survey referred to underfunding or doing more with less, other data points from our survey confirm that IT funding continues to be a big issue. One of the more plaintive cries came from a respondent who says IT continues to be viewed "as a cost center to be constantly cut and underfunded, not as an innovative investment that allows business tech to support and enhance business growth strategies." In other words: We want to be a strategic partner, but our employers aren't letting us.

Our research hints at another vicious circle: Because some IT organizations aren't perceived as very strategic or otherwise helpful to business decision-makers, their funding gets cut, throwing IT pros into crisis and survival mode, at which point they become less helpful.

We all know of situations where IT is part of the solution, and our survey does reveal bright spots. But it also shows that IT organizations continue to prioritize infrastructure and security projects over those that engage the business in creating ongoing value, even if respondents' top two goals are to "improve business value" and "create better internal customer service."

These are laudable goals, so what's causing the disconnect? Our survey shows flat (43% of respondents) or decreasing (13%) IT funding for more than half of organizations, so visionary and discretionary spending is likely off the table for them. For those that do have increased funding (39%), they may not be out of the hurt locker long enough to do anything but play catch-up with deferred maintenance. This situation contributes to the same vicious circle: In an atmosphere where IT pros spend more of their time in the data center than helping customers, those paying the bills are apt to consider IT as a marginal player. In such an environment, nobody's consulting with IT before adopting consumer and cloud products (for file sharing, note taking and CRM, to name just a few) that promise instant gratification. And if those products and services don't work for the business units, it's easy for them to blame the infrastructure, which puts IT in the unenviable position of having support responsibility without planning authority -- fodder for more vicious circles.

Now add the mega-meme of the chief digital officer, here to let business units do all of the cool stuff they want to do on the Internet without any of the fatty IT control-freak calories, and you have a pretty good picture of the state of affairs at the modern enterprise.

It's possible that IT staffers and even some managers and CIOs are focusing on what they know they have some control over: infrastructure. Yet most would agree that business units generally prefer their IT projects the way they prefer their marketing: relevant and easy to tie back to business goals. Virtualizing servers isn't exactly the type of thing that makes a business unit leader's heart go pitter-pat.

Tim Monahan, director of IT for JW Aluminum, sums the conflict up pretty well. He compares two tech projects: a manufacturing execution system, which standardizes processes across discrete plants, and a migration of Microsoft Exchange from on-premises to the cloud. The former project, Monahan says, "provides clear insight as to where the business is making money or has its biggest challenges. " The latter is, at best, "cost- and impact-neutral to the business."

Expansion, Maintenance, or Consolidation, which phase are you in? Chances are it is not expansion (yet) unless you are in the X-aaS business. It probably depends on the locus of top line revenue, and the factoring of IT input in support and enhancement of revenue streams. If budgets are cut on all fronts, chances are you have already been thru consolidation and are concentrating on maintenance: just keeping afloat. How cost-effective is a consultant in this circumstance? One could argue that an expert is effective in all three: in Expansion for market advantage; in Consolidation to reduce head count; in Maintenance for market positioning.

There's no doubt Google has made headway into businesses: Just 28 percent discourage or ban use of its productivity ­products, and 69 percent cite Google Apps' good or excellent ­mobility. But progress could still stall: 59 percent of nonusers ­distrust the security of Google's cloud. Its data privacy is an open question, and 37 percent worry about integration.